After standing strong against Ferdinand Piech’s Audi (a part of VAG) and their insistence on buying Alfa Romeo from Sergio Marchionne’s Fiat Group, the charismatic chairman shockingly announced today that an agreement has been reached to sell the beloved automaker to his fierce rival. Actually, the deal was brokered between Audi’s CEO Rupert Stadler and Marchionne.

Citing the need to raise capital to help sustain the company as a whole in the wake of the ongoing European economy crisis, Sergio stated that this was “an evil necessity” in order to insure that the other companies did not suffer. In their native Italy, nationwide sales have plummeted, affecting Fiat moreso than other automakers. To make matters worse, Fiat counts on robust sales in their home country to keep them in the black. Perhaps this is why the re-launch of Alfa in the States has been postponed so many times.

Not only was the Italian brand sold to Audi, but Fiat’s Pomigliano assembly plant was included in the deal as well. This will be a homecoming of sorts for Audi, as Pomigliano was built in the 1960’s to produce Audis, but currently produces one of Top Gear’s James May’s favorite vehicles, the Fiat Panda. In addition, Fiat’s Magneti Marelli parts unit is still being negotiated, but as of now, the two sides have yet to come to terms on the agreement. Sources say that this may ultimately wind up as a separate agreement altogether.

Purchasing Alfa and the Pomigliano assembly plant is a big win for Audi, as it will expand their ever-growing presence in Italy. They already own the Italian exoticar builder Lamborghini, as well as motorcycle maker Ducati, and they picked up styling center Italdesign-Giugiaro back in May 2010.

Although selling Pomigliano won’t makes many waves in Italy, the same can not be said about Alfa. Now Sergio must contend with the anticipated protests from government leaders, unions, and many Italians that are passionate and loyal to their hometown automaker. Conversely, many analysts predict that Alfa will thrive under the leadership of Audi, citing the enormous success in terms of production quality and the expansion of Lamborghini’s lineup. They also expect to see the same winning formula being applied Ducati as well.

Dumping Alfa will allow Marchionne to concentrate on the ongoing saga of his attempt to takeover Chrysler, before the United Auto Workers union’s Voluntary Employee Benefit Association (VEBA) can launch an IPO of their minority stake of 41.5% of the total shares of the company. Without 100% control of the beleaguered company, Fiat will not be able to expand into the American market as planned, and it will also curtail expansion plans in its own home market.